Chicago [US], September 25: CBOT agricultural futures were flat or lower in the past week as record rise in U.S. interest rates is causing demand destruction and a slowing of the U.S. and world economy.
With the odds that central banks of the United States and some other countries orchestrate a soft landing in decline, Chicago-based research company AgResource maintains that the outlook for agricultural futures will be complex with tight supply/stocks battling faltering demand.
Corn ended flat this week as U.S. yield and Black Sea supply concerns collide with pitiful export demand and weak energy markets. AgResource suggests that bullish momentum between now and mid-autumn hinges upon supply dislocations and that an intermediate top will be scored once the size of the U.S. crop is determined in mid-October. Thereafter, a worsening Argentine drought will be required to keep CBOT corn futures perched above 6.50 U.S. dollars.
Unlike a year ago, the ethanol market is not signaling the need or enlarged production. Current stocks are more than adequate. Gasoline consumption has failed to match year-ago levels since mid-summer.
World wheat futures ended the week firm, but gave back most of the gain on Friday.
Ongoing drought in the United States and Argentina lends support to corrections. A range of 8.50-9.50 for wheat futures is projected into December contract expiration. New rally highs will be rewarded with cash sales. Volatility is certain with the fund short position now in decline.
Soybean futures were on both sides of unchanged throughout the week and finished lower on late-week fund selling.
Soybean export inspections amounted to 19 million bushels last week, compared to 10 million bushels a year ago, when the Gulf was recovering from a hurricane. Exports this year should maintain a sizable lead on last year through the first half of the year. Argentina has been a large old crop soybean seller in recent weeks, and another South American drought is needed for 2022-2023 exports to exceed last year.
Soybean harvest was reported at 3 percent complete last week. Warm temperatures in the first half of the week and favorable field conditions aided harvest conditions, and it is expected that harvest progress through Sunday will have reached 12-15 percent complete. The expanding physical supply looks to weigh on cash markets and drag CBOT soybean futures lower.
U.S. Department of Agriculture will release September grain Stocks report next week. AgResource maintains a view of seeling both old and new crop soybeans on a bullish market response. Concerns remain for expanding South American production and a slowing U.S. and world economy.
Source: Xinhua